Commerce in Lao PDR reached a milestone on Tuesday when trading began on the nation's newly opened stock market, the Lao Securities Exchange (LSX).

Standing Deputy Prime Minister Somsavat Lengsavad struck a gong to launch trading at the LSX building in Vientiane at 11 a.m. on Jan. 11 of 2011, ringing in a new era for Laos as it seeks to modernize its economy, maintain growth and draw more foreign investment.

After strong initial public offerings (IPO) at the end of last year, the first companies in Laos to issue shares were state enterprises Banque pour le Commerce Exterieur Lao (BCEL) and EDL- GEN, a unit of energy supplier Electricite du Laos.

Vathana Dalaloy is Acting Secretary General of the Securities Exchange Commission that has led the development of the LSX over the past five years.

"It's a historic moment for Lao PDR, it's had good response from both domestic and international investors, because (EDL-GEN) is trading with foreigners. It's a good signal that the Lao security market, as well as the capital market, is going to grow," she told Xinhua at the launch.

EDL-GEN's shares were oversubscribed by foreign investors to the tune of 27 million U.S. dollars during December's IPO, according to its CEO Sisavath Thiravong on Tuesday.

"The IPO was well received and successfully captured a broad pool of investors from 21 countries, including 10 financial institutions," said Sisavath during his address.

He added that domestic buyers accounted for 59 percent of sales and foreigners made up the remaining 41 percent.

Meanwhile, shares in BCEL are not available to foreigners.

"BCEL also intended to sell part (of its stock) to foreigners but expected to get strategic investors, so selling is probably going to be carried out later on through a negotiated price, it's not going through an IPO so they can lock the portion for strategic investors," said Vathana.

LSX Chairman and CEO Dethphouvang Moularat said at the launch that he has a two-year target for 10 listed companies, but Vathana was cautious of expanding too fast.

"Ten listed companies is an estimated number, right now we have received interest from many enterprises registered in Laos. We haven't gone through them, we are not sure of those that are ready for the stock exchange. Some are still preparing, maybe they need 6 to 9 months, or will wait a longer time to join," she said.

To issue shares on the LSX, companies must first meet stringent criteria, a new concept to some Lao businesses used to operating with little regulation, and one that will set the rate of expansion of the exchange.

"Companies that want to list have to have had an external audit for the past 3 years. Apart from large companies, most don't have an external audit, and they need some time to adjust. They need time to prepare a strategy for their business for the next 3 years, and they need to prepare plans for management and marketing," Vathana said.

Foreign investors were a strong presence at Tuesday's launch, but indications are that they will be waiting some time for more share options on the LSX as it works to bring uniformity to those seeking to enlist.

"Some are state-owned enterprises, some are joint-venture companies. If it's a joint-venture between foreign direct investors and Lao partners, it's up to their decision making whether to open more for foreign investors or not, each sector has its own strategies," said Vathana.

"I personally believe (LSX) is going to go well and over the next ten years we'll be more or less able to build it to integrate with the Asean exchange and securities markets. That should be our key objective."

VietNamNet/Xinhuanet